Financial audit shows no findings, clean report for SISD
In its latest financial audit for the 2020-2021 year, the Sherman Independent School District has received a healthy report. The district was recently presented with an unmodified audit report — the highest level a governmental entity can receive.
The audit by Hankin, Eastup, Deaton, Tonn & Seay is an important barometer for the district, its financial stability and financial oversight and can be useful for federal agencies, the Texas Education Agency, bond holders and other rating agencies.
"The audit went very well. We did not have any problems or issues during the audit," Auditor Dan Tonn said last week. "Everything was very positive. We were able to get all of the record we needed and all the cooperation from the finance department and we thank them for that."
The audit found no weaknesses or issues in the district's accounting or internal controls over its finances and financial reporting. Tonn went onto say that the district fared financially well over the last year and was in strong financial condition.
"The term unmodified means there were no modifications necessary to the standard auditor's report for any issues like findings or compliance or anything like that," he said. "So it is a completely clean opinion."
The audit found that the district's assetts and deferred outflows closed the year ahead of its liabilities and deferred inflows, giving it a net position of $2.90 million. This was about $475,000 less than it was for the 2019-2020 year.
In total, the district saw about $110.62 million in expenses for the year with about half — 56.53 million — related to instruction expenses. The second largest expense for the district was its facilities maintenance and operations, which cost about $8.93 million. The district's long-term debt was its third highest expense at $6.79 million.
The district's total combined fund balances decreased by $43.52 million to $56.26 million, with capital projects related to the high school construction cited as the leading contributor to this decrease, Tonn said. In total, the district's capital project fund decreased by $48.55 million in the last year.
While the district's fund balances decreased, so did its debts. The audit found that the district's bonded debt decreased by $4.375 million. Currently, the district's bond debt sits at about $203.32 million.
Tyson Bennett, SISD assistant superintendent of finance and operations later spoke before the school board of trustees during the semi-annual financial update about the district's fund balance, which the district has worked to build up in recent years. The unassigned fund balance sits at $33.51 million — or 46 percent of the fund balance. This puts the unassigned balance at about five-and-a-half months of operating expenses.
By comparison, the district's unassigned balance made up about 27.6 percent of its balance in 2017.
"You guys have made a point to grow our fund balance over the years specifically for projects that you knew we would need to undertake and also as a safeguard for the finances of our school district," Bennett said.
Traditionally, the unassigned balance serves multiple purposes ranging from covering cash flow during the fall before property taxes are collected to demonstrating stability to bond rating agencies. The funds also can serve as a financial cushion for the district.